Law Summary

1. Grant of Franchise

• Explanation: This section grants a fifty-year franchise to William H. Allen and J. H. Brown, and their successors, to construct and operate telephone and telegraph systems across Luzon.
• Key Definitions:
  • Franchise: A right or privilege granted to operate telephone and telegraph systems.
• Requirements/Procedures:
  • Construction of lines, poles, and conduits is permitted in public spaces as designated by local authorities.
• Timeframes: Franchise is valid for 50 years from passage.
• Consequences: Non-compliance with construction requirements can lead to penalties.

2. Construction and Maintenance Standards

• Explanation: Grantees must maintain high construction and operational standards for their systems.
• Key Definitions:
  • Conduits: Channels for electrical transmission.
• Requirements:
  • Poles must be straight, smooth, and painted where necessary.
  • Compliance with local regulations is mandatory.
• Timeframes:
  • Installation of significant infrastructure (e.g., 120,000 feet of conduit) within specified periods.
• Consequences: Failure to meet standards can result in forced relocation or repair by authorities at the grantee's expense.

3. Financial Obligations and Auditing

• Explanation: Grantees are required to maintain accurate financial records and are subject to auditing.
• Key Definitions:
  • Gross Receipts: Total income from business operations.
• Requirements:
  • Separate accounts must be kept for transactions in Manila and provinces.
  • Annual submission of financial records to Insular Auditor by July 31.
• Timeframes:
  • Reports due annually.
• Consequences: Failure to report may result in financial penalties.

4. Taxes and Fees

• Explanation: The grantees must pay taxes similar to other corporations and a percentage of gross receipts.
• Key Definitions:
  • Gross Receipts Tax: Tax based on total revenue from operations.
• Requirements:
  • Two percent of gross receipts must be paid annually to the Insular Treasurer.
• Timeframes: Payment due within ten days after accounts are audited.
• Consequences: Non-payment of taxes can lead to legal action.

5. Construction Guarantees

• Explanation: A monetary deposit is required as a guarantee for construction commitments.
• Key Definitions:
  • Liquidated Damages: Pre-determined compensation for failure to meet contractual obligations.
• Requirements:
  • A deposit of ₱50,000 or equivalent securities must be made.
• Timeframes:
  • Construction must begin within 18 months; specific infrastructure must also be completed within this timeframe.
• Consequences: Failure to comply results in forfeiture of the deposit.

6. Rights of Transfer and Assignment

• Explanation: The franchise can be transferred to a designated corporation with specific conditions.
• Key Definitions:
  • Automatic Telephone Construction Company: The specified entity eligible for transfer.
• Requirements:
  • Transfer requires the Governor-General's approval.
• Consequences: Unauthorized transfers render the franchise void.

7. Public Safety and Liability

• Explanation: Grantees must ensure public safety and may be held liable for accidents related to their operations.
• Key Definitions:
  • Public Interest: Considerations that affect the general population's safety and welfare.
• Requirements:
  • Grantees must hold local governments harmless from claims arising from their operations.
• Consequences: Liability for accidents can lead to financial compensation claims against the grantees.

8. Rate Regulation

• Explanation: The government reserves the right to regulate the rates charged for services.
• Key Definitions:
  • Rate: The price charged for service provision.
• Requirements:
  • Rates must yield a reasonable return on capital after expenses.
• Consequences: Unreasonable rates can lead to regulatory action.

9. Amendment and Repeal

• Explanation: The franchise is subject to future amendments by U.S. Congress.
• Key Definitions:
  • Amendment: Changes to existing laws or regulations.
• Consequences: Grantees must comply with any future modifications.

Key Takeaways

• The franchise allows for extensive electrical transmission operations in Luzon for 50 years.
• Specific construction, maintenance standards, and financial obligations are outlined.
• Grantees must comply with local regulations and are subject to audits.
• Significant penalties exist for non-compliance with construction and financial reporting requirements.
• The franchise is not exclusive; other parties may be granted similar rights, provided they do not interfere with existing operations.